Retirement Health Care Costs Projector - ADP

Retirement Plan Solutions

Retirement Health Care Costs Projector Plan ahead to ease the pain of health care costs in retirement.

ADP’s Retirement Health Care Costs Projector

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Table of Contents

Introduction 3

Planning for the Expected – and the Unexpected 5

The Best Medicine? Planning Ahead 6

Knowledge: Just What the Doctor Ordered 7

Introduction

THE STAGGERING COSTS OF HEALTH CARE The costs of health care can hurt any budget — especially for retirees. And with so many variables and unknowns to consider, employees who are trying to plan ahead have it tougher than ever before.

5.1%

MORE THAN

$280,000

Health Care

The projected health care costs in retirement for a 65 year-old couple who retired in 2016.1

$377,412

Projected rising cost of health care over the next several years.1

Social Security Cost Of Living Adjustment (COLAs) for 2017 2

JUST

0.3%

Estimate for total health care expense in retirement like dental care, vision, copays, and assorted out-of-pocket expenses for a 65 year-old couple who retired in 2016.1 Total retirement health care cost inflation combined with age-related expenses are expected to exceed COLAs by approximately 50 percent for the next decade.1 This may mean that retirees will need to allocate more of their Social Security income to help pay for health care.

1) HealthView Services, 2016 Retirement Health Care Cost Data Report. 2) https://www.ssa.gov/oact/cola/latestCOLA.html


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No matter how you break it down, Americans are living longer according to the Society of Actuaries. However, the effect of living longer is that your employees will need to save more for health care costs in retirement. Even living two years longer has the potential to significantly impact a person’s retirement savings.

$465,907 1 in 4 65 year olds today will live past age 90.3

The anticipated out-of-pocket premiums and health care expenses during retirement for a 55 year-old couple retiring in 10 years.5

7 in 10 Americans

$23,853 Who reach age 65 in the next five years

could be impacted by the costs associated with long-term care. 4

Additional total retirement health care costs for a 55-year old couple who live two years beyond their average life expectancy.5

3) Source: https://www.ssa.gov/planners/lifeexpectancy.html. 4) “Perspectives on the Challenges of Financing Long-term Services and Support,” LeadingAge Pathways Report, February 2016. 5) HealthView Services, 2016 Retirement Health Care Cost Data Report.

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Planning for the Expected — and the Unexpected As your employees save for their retirement, they may have contemplated what their retirement-spending budget is likely to cover – such as household utilities, groceries and car insurance. However, they most likely have not calculated one of life’s biggest expenses in retirement – health care. Your employees need to understand just how much they may need to save to cover health care costs during retirement. Unfortunately, figuring out how much money they’ll need for this expense can be intimidating since these costs continue to rise, Medicare is an intricate and complex program, and the future of the Affordable Care Act is uncertain. Your employees need to plan for what they know and what they don’t know, or risk falling short of income that’s essential for retirement living. That’s why ADP is making the Retirement Health Care Costs Projector available. Accessible through the retirement savings website, this tool is part of our financial wellness program. The projector gives employees the chance to start thinking about how health care costs may affect their retirement savings — and how those costs could impact their saving habits now.

Saving can be easier when your employees can make decisions based on the best information available.


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The Best Medicine – Planning Ahead The Retirement Health Care Costs Projector looks at several factors to calculate projections for retirement income and estimated health care costs, including current employee contributions and income, other sources of potential income in retirement, and projected monthly retirement income. These factors are paired with the participant’s personal data, like age, gender, state of residence, current income, and health status — to project possible health care costs in retirement and their potential impact on retirement income. Employees can easily edit their contributions directly from this projector if they think it will help them be more prepared for retirement. Understanding the possible cost of health care in retirement is a critical part of a total financial wellness plan for your employees. ADP’s Retirement Health Care Costs Projector is just one of the valuable resources we offer to help them get on track for retirement — and stay there.

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Knowledge: Just What the Doctor Ordered At ADP Retirement Services, we care about your employees’ financial well-being — and we know you do too. Help them make the connection between financial wellness, preparing for future health care needs, and peace of mind...now, and in the future. Contact your ADP Retirement Services District Manager for more information about the Retirement Health Care Costs Projector. Your District Manager can take you through an online demonstration of the tool so you can see how easy it is to use and how beneficial it may be in helping your employees prepare for retirement.

By taking the time to consider these costs now, your employees are empowered to make the right moves toward meeting their future financial goals.


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www.adp.com/401k ADP Retirement Services 71 Hanover Road Florham Park, NJ 07932

ADP Retirement Services 71 Hanover Road, Florham Park, NJ 07932 The Retirement Health Care Costs Projector (RHCCP) is the property of HealthView Services, Inc. and is provided for educational purposes only. Cost projections and other information generated by the RHCCP are estimates, hypothetical in nature, dependent upon the quality of input data as well as certain assumptions, and are not guarantees of future results. Actual health care costs will likely vary (sometimes significantly) from the estimate. ADP cannot guarantee or assure a plan participant’s ability to meet any of their goals or that any hypothetical results actually will occur; has not verified or confirmed the accuracy of these guidelines, assumptions or estimated costs; and does not provide health care advice, products or services. Nothing expressly contained or implied on ADP’s participant website or in any RHCCP estimate is intended or shall be construed as medical or other professional advice by ADP. For specific medical advice, diagnosis and treatment, participants should contact their personal physician. Participants should consult with their tax advisor or financial professional and not rely on the RHCCP as the primary basis for their investment, financial, or tax planning decisions. Unless otherwise agreed to in writing with a client, ADP, LLC and its affiliates (ADP) do not endorse or recommend specific investment companies or products, financial advisors or service providers; engage or compensate any financial advisor or firm for the provision of advice; offer financial, investment, tax or legal advice or management services; or serve in a fiduciary capacity with respect to retirement plans. Investment options are available through the applicable entity(ies) for each retirement product. Investment options in the “ADP Direct Products” are available through either ADP Broker-Dealer, Inc. (Member FINRA), an affiliate of ADP, LLC, One ADP Blvd, Roseland, NJ (ADP BD) or (in the case of certain investments) ADP, LLC. Only licensed representatives of ADP BD or of a broker-dealer firm that has executed a marketing agreement with ADP, LLC may offer and sell ADP retirement products and services or speak to retirement plan features and/or investment options available in any ADP retirement product. Nothing in these materials is intended to be, nor should be construed as, advice or a recommendation for a particular situation or plan. Please consult with your own advisors for such advice. ADP and the ADP logo are registered trademarks of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. All other trademarks and service marks are the property of their respective owners. 99-4586-0617 Printed in USA © 2017 ADP, LLC. ALL RIGHTS RESERVED.